The most well-known business plan models include among their parts a complete chapter dealing with financial evaluation. Aspects such as cash flow, income statements, company balance, etc. are considered within this chapter.
As if the above were not enough, you can also dedicate a space to analyze financial and budget risks and a lot of other items.
It is not that this is not necessary, but that many times entrepreneurs, because they are paying attention to so much data, forget that our efforts in this field are aimed at specifying and refining our Income Model.
It is about explaining how the company will get its resources. Many companies are not dedicated to selling anything, however they have to be very clear where the resources will come from to keep it running.
Resources can be the product of donations, state subsidies etc. The truth is that this is not the center of the debate either. What we are trying to establish is whether the model is sustainable over time. This income plan must also be consistent with the rest of the company's projects and objectives. For example: an e-bussinnes company cannot claim to live eternally on external financing, while its sales systems do not work and report losses or simply do not even give it to pay for the operation.
Let's not confuse an introduction stage, where it is necessary to invest and we are aware that profits are still far away, with a company in eternal deficit.
A very important factor is deciding what the means of financing will be at the beginning of the business cycle, but keep in mind that an investor will look at two things mainly.
- The work team: Who or those who make up the company in which they plan to invest.The income model: If you do not have a clear idea of how the money will flow, be sure that you will lose your angel investor.
Of course, these two points are part of the business plan, so they must be included in it so that it is clear to everyone. But it turns out that despite all the recommendations that the entrepreneur may receive, he is still determined to take care of other things rather than build the business plan document.
So it turns out that many entrepreneurs do not mature enough the entrepreneurial idea and decide to jump without a parachute.
These are the first to disappear.
It is unheard of that these days it is intended to maintain a company only with the work of the partners in the long term. It is true that building a business is hard work, but from day one there must be a priority. Generate your own income, thus solving internal problems and accelerating growth.
On the other hand, it is not a matter of writing a complicated process for the realization of the company's product; in fact, a simple and clear plan is more appreciated than one that takes many turns. The simpler the process is shown, the more reliable it will be.
The income model must be credible, we get nothing out of telling lies to ourselves. Business ideas receive this category thanks to their real potential for development in the market and their profitability. If your idea does not generate income, it is better to review it again before calling it a business.
It does not matter if you decide not to share your company with anyone, it does not matter if your business idea is seasonal or if you are only interested in owning it for a while and then selling it, it does not matter if you are full of hope and faith in your project, or if the business cycle is long; You must have a firm income model, hopefully from the beginning and put it into production as soon as possible.
It is recommended that it does not depend on a single product, and that the market study is as real as possible. Your company's environmental analysis will give you valuable ideas on how to make strategic decisions that will strengthen your revenue model.
Both external and internal clients and their potential partners and investors are interested in the stability of the company. Some because your work depends on it, others because your profitability depends on it, but everyone ultimately expects that the company you are forming fulfills what was promised.
The so-called risk capitals run away from risk. Forget that the only source of these resources are large companies, there are also other people who are looking for where to place their capital. If they do not see how the firm will respond to their financial demands, their idea will be rejected.
In short, a failure that keeps repeating itself in business projects is a weak income model and a carefree work of the business plan. Do not fall into this trap, differentiate the urgent from the important and define priorities, otherwise it may be the last mistake you make at the head of your company or your business idea.
